3 Mistakes To Absolutely Avoid In A 1031 TIC Exchange

W e've all made bad             exchanges it for a "like-kind"     decisions in the past.        property of equal or greater       Don't you just hate to        value. By doing so, he defers the  hear "I told you so" from your        payment of capital gains tax and   friends and family? Or, maybe you     the consequences of recaptured     catch yourself saying "If only        depreciation.                      I'd have..."?                                                                                                  By exchanging into a tenant in     Personally, I'm one of those          common property, or a TIC, he      people who prefers to learn from      becomes a part owner of a large    someone else's mistakes. If           commercial property managed by     you're at all like me, and you        professionals, who in turn pay     have thought about doing a 1031       him a monthly income. It comes     exchange into a tenant in common      with fewer strings than private    (TIC) property, take note. You        annuity trusts, charitable         can avoid making the 3 Major          remainder trusts, or an exchange   Mistakes that others wished they      into another property that still   knew before leaping from the          needs your attention and often     frying pan into the fire!             drains your wallet. I find that                                          very few individuals, CPA's,       Before I let you in on the            attorneys, or even financial       secrets, let me briefly explain       advisors are sufficiently well     what a 1031 exchange into a           versed in the 1031 exchange into   tenant in common property is.         a tenant in common property. It    It's a fairly well-kept secret in     can be a terrific deal!            and of itself.                                                                                                 Those who benefit most from this   A 1031 exchange is when an            type of an exchange usually have   investment property owner sells       several things in common.          his current property and              1. They own investment property    that has appreciated                  and ask for referrals from         significantly in value.               satisfied clients. Ideally, this   2. They are tired of all the          should be their only business.     hassles of property management.       Are all their properties "A"       3. They don't want to pay huge        grade commercial buildings, or     amounts of capital gains tax if       are they somewhat less desirable?  they sell.                            Ask how they find the properties   4. They would like to have a          and what criteria they use to      significant increase in monthly       select them. Quality properties    passive income.                       are hard to find and sell out      5. And, lastly, they still enjoy      quickly. In real estate, the       the relative stability of             quality properties will remain     owning real estate.                   more desirable, even when the                                            mediocre properties start to lag.  Know of anyone who fits this          Ask yourself if you would like to  description? If so, read on.          have your office in that                                                 building, or go to see your                                              doctor there, or if you'd shop in  There are 3 Major Mistakes that       that strip mall.                   can turn your investment into a                                          nightmare. So, avoid these at all     Note: Also be cautious going the   costs when contemplating this         private route and getting into     type of exchange.                     Limited Partnerships when only                                           one or two major players make all  Mistake #1: Dealing with an           the decisions. And, unless you     investment company that does not      have extensive experience in       have their act together. If they      commercial property, don't get     seem like they don't know what        together a bunch of your friends   they are doing, run! Look into        and choose this property on your   their history of TIC offerings,       own.                                                                     shape. This company should offer   Mistake #2: Choosing an               you a long term triple net lease   Accommodator that has not done        that has your annual income        many, many of these transactions.     percentages spelled out, along     This Qualified Intermediary makes     with scheduled increases. There    sure all the documents and money      aren't many out there willing or   transfers meet all the IRS            able to do this. Ask for an        guidelines. They will set up your     accounting of their track record   LLC. You must use an Accomodator      with other properties, how long    that you don't already have a         they've been in business and for   relationship with. Your family        a list of any judgments brought    attorney or estate planning           against them. See if they've ever  attorney may not qualify. The         requested special assessments, or  last thing you want is the IRS        had any foreclosures. A good       sending you a hefty bill for          management company is worth its    taxes or penalties, or the whole      weight in gold. You want them to   transaction falling through due       make a tidy profit, because their  to an incompetent or                  performance is directly related    inexperienced Accommodator!           to your investment stability.                                                                               Mistake #3: Skimping on the           Well, there you have it. Don't be  property management company. They     "Penny wise and Pound Foolish".    are extremely crucial to the          This is one time that hiring the   performance of your investment.       best will definitely bring you     You will be depending on them to      the most favorable results. It     handle the day to day problems        should truly be a win-win          that arise, carry the proper          situation for everyone involved.   insurance, pay the property taxes                                        on time, and keep your building       By avoiding the 3 Major Mistakes   fully occupied and in tip top         for a 1031 exchange into a tenant  in common property, you will be       and watch your investment grow!    the one saying "I told you so" as                                     you collect your monthly check         About the Author: Paula Straub is a Financial Advisor, Insurance Agent and Mortgage Loan Originator in San Diego, CA. She'll teach you how to save thousands in Capital Gains Tax in a free Teleconference . Visit the link: http://www.savegainstax.com Source: www.isnare.com